Inflation & Rising Home Prices - Should You Buy?
Inflation is rising and so are home prices. Should you buy right now?
Last week there was a big jump with inflation … 4.2% which is a jump we haven’t seen in awhile. And according to CNBC, when the economy was slowing down last year, and people were pulling back in the overall economic scenario … in comparison to today, were recovering from the panedemic and that’s a good thing. We want to see more businesses being able to operate at full capacity, and that creates inflation.
What we have going on right now across the economic scenario is we have a supply and demand imbalance. We have a lot of people that want to buy a particular good and supply is low, and in housing that’s certainly true, and other businesses that haven’t been able to bring capacity back for a number of different reasons, following the pandemic, maybe things had to be shut down and supply chains that were challenged by the pandemic, and now people want things now and people are back out there and it’s causing those issues. But overall, a very good thing.
In terms of the real estate business, from chief economist Lawrence Yun, the National Association of Realtors (or NAR), just came out with their 2021 Q1 home price report and NAR is saying 99% of metro areas recorded year over year price increases and 89% had double digit price gains.
This is causing people to say prices are moving very very quickly in the housing market, and I know some people have concerns about the housing market and about the rate at which homes are appreciating.
Here are what the top four financial institutions are saying to their customers about the housing market - JP Morgan Chase, Merrill Lynch, Goldman Sachs and Morgan Stanley.
JP Morgan Chase says buy right now, because the next twelve months it’s only going to cost more and they don’t see prices coming down anytime in the near future.
Merrill Lynch states demand is very strong, supply is unusually tight, with available homes for sale at record low levels. Double digit price gains are rationing the supply.
Goldman Sachs states strong demand for housing looks sustainable.
Morgan Stanley also claims unlike 15 years ago, that this time, the sector is on sustainably, sturdy foundation.and we are not experiencing a bubble in US housing. Home prices will continue to rise, but more gradually.
Coming out of the downturn of 2008, many people said they didn’t know if owning a home is the American dream, and might just rent. People lost a lot of money. It’s been 12-13 years ago, and today we are almost seeing the exact opposite happen! We’re seeing more people want to buy a home than prior to the pandemic and there’s a lot of reasons for this. We’re seeing optimism and a lot of people willing to pay over the list price of a home because they’re coming from a place in the last year where we have educated our kids, we’ve worked out … or whatever the case may be for individuals or families.
I hope all of this information helps you if you are thinking about buying or if you’re thinking about selling, I want to make sure youre educated on what's happening in the market.
As always, I’m grateful for the time you’ve invested to read this and please let me know in the comments below if this was helpful.